Why Bitcoin's Astonishing Price Collapse Doesn't Matter

The digital currency is down 34%. It's valued around ~$200. That
is significantly down from its peak, which was near $1,000.

If bitcoin were simply a digital currency that exploded and
collapsed, that would be that. We could all move on, and act like
nothing happened.

But, bitcoin is more than another fad according to venture
capitalists who are pouring millions of dollars into it.

A year ago, when bitcon's value
was flying to the moon, Marc Andreessen wrote
an op-ed for The New York Times on why bitcoin matters. In
it, he compared bitcoin to the internet and personal computers.
He believes bitcoin has the potential to
be that transformative.

Another influential VC, Fred
Wilson, is a big believer in bitcoin. He also believes it has a
chance to be a transformative technology. He has invested in
companies working on bitcoin.

But now that the price is
cratering, are Wilson and Andreessen going to see their
investments go poof? No, at least, not in their
opinions.

On Twitter, Wilson said the
price collapse could actually be a good thing. He said the
"price decline will certainly have impact." But, he added,
the "best thing to come of it may be to get people to stop
focusing on & talking about price."

Another investor in bitcoin,
Barry Silbert, said he's
seen "no impact" from the price of bitcoin
falling.

So, what has these people so
excited about bitcoin, even though the price is falling?

I spoke with Scott Rosenberg
about it on the podcast I do with Farhad Manjoo of The New York
Times. Rosenberg is veteran technology writer who co-founded
Salon. He wrote
a big piece on bitcoin, and its potential for Backchannel, a
new technology site.

The reason people are excited
about bitcoin has less to do with bitcoin and more to do with the
technology that supports it. That technology is called
"blockchain." Essentially, blockchain creates a new type of
internet. Bitcoin is just the first application on top of the
blockchain.

To look at the failure of
bitcoin, and say that it was just a fad, according to Rosenberg,
is to look at early web products that were bad and say, "Well,
looks like the internet isn't going to work!"

The internet came together when
Netscape was built. It took years before Google search existed.
It took years for Facebook, and all sorts of other great
applications to be built. In theory, blockchain will do the
same.

There are, of course, many
problems with this idea, which we dig into on our podcast: